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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1996.
-------------------
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to .
Commission File Number 33-21970-02
Jones Programming Partners 1-A, Ltd.
- ------------------------------------------------------------------------------
Exact name of registrant as specified in charter
Colorado #84-1088820
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State of organization I.R.S. employer I.D.#
9697 East Mineral Avenue, P.O. Box 3309, Englewood, Colorado 80155-3309
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Address of principal executive office
(303) 792-3111
-----------------------------
Registrant's telephone number
Indicate by check mark whether the registrant (l) has filed all reports required
to be filed by Section l3 or l5(d) of the Securities Exchange Act of l934 during
the preceding l2 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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JONES PROGRAMMING PARTNERS 1-A, LTD.
------------------------------------
(A Limited Partnership)
INDEX
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Page
Number
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Statements of Financial Position as of
September 30, 1996 and December 31, 1995 3-4
Unaudited Statements of Operations for the
Three and Nine Months Ended September 30, 1996 and 1995 5
Unaudited Statements of Cash Flows for the
Nine Months Ended September 30, 1996 and 1995 6
Notes to Unaudited Financial Statements as of
September 30, 1996 7-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-12
PART II. OTHER INFORMATION 13
</TABLE>
2
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JONES PROGRAMMING PARTNERS 1-A, LTD.
------------------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF FINANCIAL POSITION
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ASSETS
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<CAPTION>
September 30, December 31,
1996 1995
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<S> <C> <C>
CASH AND CASH EQUIVALENTS $388,762 $ 502,435
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RECEIVABLES:
Foreign income receivable 145,659 317,319
Domestic income receivable 93,077 140,000
Accounts receivable from affiliates - 36,848
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Total receivables 238,736 494,167
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INVESTMENT IN AND ADVANCES FOR FILM PRODUCTION,
net of accumulated amortization of $8,695,557 and $7,952,542
as of September 30, 1996 and December 31, 1995, respectively 191,649 934,664
-------- ----------
OTHER ASSETS 2,999 2,273
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Total assets $822,146 $1,933,539
======== ==========
</TABLE>
The accompanying notes to the unaudited financial statements
are an integral part of these unaudited financial statements.
3
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JONES PROGRAMMING PARTNERS 1-A, LTD.
------------------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF FINANCIAL POSITION
------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
-------------------------------------------
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
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<S> <C> <C>
LIABILITIES:
Accrued distributions payable to partners $ 160,897 $ 160,897
Accrued liabilities 7,513 6,000
Accounts payable to affiliates 769 -
----------- -----------
Total liabilities 169,179 166,897
----------- -----------
PARTNERS' CAPITAL (DEFICIT):
General partner -
Contributed capital 1,000 1,000
Distributions (39,222) (34,395)
Accumulated deficit (9,214) (2,904)
----------- -----------
Total general partner's deficit (47,436) (36,299)
----------- -----------
Limited partners -
Contributed capital, net of offering costs
(12,743 units outstanding as of September 30, 1996
and December 31, 1995) 5,459,327 5,459,327
Distributions (3,882,926) (3,405,062)
Accumulated deficit (875,998) (251,324)
----------- -----------
Total limited partners' capital 700,403 1,802,941
----------- -----------
Total partners' capital 652,967 1,766,642
----------- -----------
Total liabilities and partners' capital $ 822,146 $ 1,933,539
=========== ===========
</TABLE>
The accompanying notes to the unaudited financial statements
are an integral part of these unaudited financial statements.
4
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JONES PROGRAMMING PARTNERS 1-A, LTD.
------------------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
----------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
GROSS REVENUES $ 38,189 $ 89,787 $ 185,590 $ 262,169
COSTS AND EXPENSES:
Costs of filmed entertainment 8,353 87,913 86,271 215,751
Distribution fees and expenses 10,401 18,465 52,033 51,231
Loss from write-down of
film productions (Note 3) 656,744 244,164 656,744 244,164
Operating, general and administrative expenses 10,766 6,001 36,050 25,644
--------- --------- --------- ---------
Total costs and expenses 686,264 356,543 831,098 536,790
--------- --------- --------- ---------
OPERATING LOSS (648,075) (266,756) (645,508) (274,621)
--------- --------- --------- ---------
OTHER INCOME (EXPENSE):
Interest income 5,036 6,374 15,742 21,374
Other expense (1,218) - (1,218) -
--------- --------- --------- ---------
Total other income, net 3,818 6,374 14,524 21,374
--------- --------- --------- ---------
NET LOSS $(644,257) $(260,382) $(630,984) $(253,247)
========= ========= ========= =========
ALLOCATION OF NET LOSS:
General Partner $ (6,443) $ (2,604) $ (6,310) $ (2,532)
========= ========= ========= =========
Limited Partners $(637,814) $(257,778) $(624,674) $(250,715)
========= ========= ========= =========
NET LOSS PER LIMITED
PARTNERSHIP UNIT $(50.05) $(20.23) $(49.02) $(19.67)
========= ========= ========= =========
WEIGHTED AVERAGE NUMBER OF
LIMITED PARTNERSHIP UNITS
OUTSTANDING 12,743 12,743 12,743 12,743
========= ========= ========= =========
</TABLE>
The accompanying notes to the unaudited financial statements
are an integral part of these unaudited financial statements.
5
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JONES PROGRAMMING PARTNERS 1-A, LTD.
------------------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
----------------------------------
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
-------------------------
1996 1995
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(630,984) $(253,247)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Amortization of filmed entertainment costs 86,271 215,751
Loss from write-down of film production 656,744 244,164
Amortization of discount - (7,858)
Net change in assets and liabilities:
Decrease (increase) in foreign income receivable 171,660 (40,168)
Decrease in domestic income receivable 46,923 -
Decrease (increase) in other assets (726) 2,857
Net change in amounts due to/from affiliates 37,617 (1,100)
Increase (decrease) in accrued liabilities 1,513 (56)
----------- -----------
Net cash provided by operating activities 369,018 160,343
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net decrease in production advances - 21,887
----------- -----------
Net cash provided by investing activities - 21,887
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners (482,691) (482,691)
----------- -----------
Net cash used in financing activities (482,691) (482,691)
----------- -----------
DECREASE IN CASH AND CASH EQUIVALENTS (113,673) (300,461)
CASH AND CASH EQUIVALENTS, beginning of period 502,435 668,088
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $388,762 $367,627
=========== ===========
</TABLE>
The accompanying notes to the unaudited financial statements
are an integral part of these unaudited financial statements.
6
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JONES PROGRAMMING PARTNERS 1-A, LTD.
------------------------------------
(A Limited Partnership)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
---------------------------------------
(1) BASIS OF PRESENTATION
---------------------
This Form 10-Q is being filed in conformity with the SEC requirements for
unaudited financial statements and does not contain all of the necessary
footnote disclosures required for a fair presentation of the Statements
of Financial Position and Statements of Operations and Cash Flows in
conformity with generally accepted accounting principles. However, in the
opinion of management, this data includes all adjustments, consisting
only of normal recurring accruals, necessary to present fairly the
financial position of Jones Programming Partners 1-A, Ltd. (the
"Partnership") as of September 30, 1996 and December 31, 1995 and its
results of operations and its cash flows for the three and nine month
periods ended September 30, 1996 and 1995. Results of operations for
these periods are not necessarily indicative of results to be expected
for the full year.
(2) TRANSACTIONS WITH AFFILIATED ENTITIES
-------------------------------------
The General Partner is entitled to reimbursement from the Partnership for
its direct and indirect expenses allocable to the operations of the
Partnership, which shall include, but not be limited to, rent, supplies,
telephone, travel, legal expenses, accounting expenses, preparation and
distribution of reports to investors and salaries of any full or part-
time employees. Generally, the General Partner has historically
contracted with several unaffiliated parties to facilitate distribution
of the Partnership's films. Accordingly, the General Partner has minimal
direct involvement in distribution of the Partnership's films, which
represents substantially all of the operating activities of the
Partnership. As a result, no portion of the General Partner's indirect
operating costs incurred on behalf of the Partnership are charged to the
Partnership as such costs are immaterial. The Partnership was charged
$3,299 and $3,068 for direct expenses for the three month periods ended
September 30, 1996 and 1995, respectively. For the nine month periods
ended September 30, 1996 and 1995, $11,928 and $8,461, respectively, were
charged to the Partnership for direct expenses.
(3) INVESTMENT IN AND ADVANCES FOR FILM PRODUCTION
----------------------------------------------
"The Little Kidnappers"
---------------------
In January 1990, the General Partner, on behalf of the Partnership,
entered into an agreement with Jones Maple Leaf Productions ("Maple
Leaf") to produce a full-length feature film for television entitled
"The Little Kidnappers." The total film cost was approximately
$3,200,000. Of this amount, the Partnership invested approximately
$2,794,000, which included a production and overhead fee of $300,000
paid to the General Partner. As of September 30, 1996, the Partnership's
net investment in the film, after consideration of amortization, was
$91,649. From inception to September 30, 1996, the Partnership had
recognized approximately $2,903,000 of gross revenue from this film,
which includes the initial license fees of approximately $1,365,000 from
The Disney Channel and the Canadian Broadcasting Corporation, which were
used to finance the film's production. As of September 30, 1996, the
Partnership had outstanding receivables from the film's domestic and
international distributors and licensees totaling $9,176. The
Partnership anticipates payment of these amounts over the next three to
twenty-four months as collected by distributors.
"The Story Lady"
--------------
In April 1991, the General Partner, on behalf of the Partnership,
entered into an agreement with NBC Productions, Inc. ("NBC") for the
production of a full-length made-for-television film entitled "The
Story Lady." The total cost of the film was approximately $4,300,000.
Of this amount, the Partnership invested approximately $1,183,000 in
return for world-wide distribution rights to this film, excluding
United States and Canadian broadcast television rights. Included in the
total amount invested is a production and overhead fee of $120,000 paid
to the General Partner. As of September 30, 1996, the Partnership had
fully recovered its remaining net investment in the film. From
inception to September 30, 1996, the Partnership had recognized
approximately $1,997,000 of revenue from this film. As of September 30,
1996, the Partnership had outstanding receivables from the film's
domestic and international distributors and licensees totaling
$229,560. The Partnership anticipates payment of these amounts over the
next three to twenty-four months as collected by distributors.
7
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"Curacao"
-------
In October 1992, the General Partner, on behalf of the Partnership,
entered into an agreement with Showtime Networks, Inc. ("Showtime") for
the production of a full-length made-for-television film entitled
"Curacao." The total cost of the film was approximately $4,410,000. In
addition to the costs of production, the Partnership paid the General
Partner $500,000 as a production and overhead fee for services rendered
in connection with arranging the Showtime pre-sale and supervising
production of this picture. From inception to September 30, 1996, the
Partnership had recognized approximately $3,995,000 of gross revenue from
this film, which includes the initial license fee and home video advance
from Showtime of $2,650,000, which was used to finance the film's
production.
During the third quarter of 1996, the General Partner reassessed the
anticipated total gross revenue remaining from the distribution of
"Curacao" in available international and domestic television markets.
Based on revised estimated television sales projections, a reduction was
made to the Partnership's estimate of total gross revenue to be
recognized from the future distribution of the film. Accordingly, based
on the reduced revenue projections for the film, a determination was made
by the General Partner that the Partnership's net investment in "Curacao"
of $756,744 exceeded the film's estimated net realizable value of
$100,000 as of September 30, 1996. As a result, a loss from write-down of
film production cost of $656,744 was incurred to reduce the unamortized
cost of the film to its estimated net realizable value as of September
30, 1996. The film's estimated net realizable value was calculated based
on an estimate of anticipated revenues remaining over the life of the
film from international and domestic television distribution, net of
estimated distribution fees and costs, as of September 30, 1996. These
revenue projections were estimated based on the film's prior distribution
history, the remaining international and domestic territories available
to the film for future television distribution, and the General Partner's
previous distribution experience with other films. As of September 30,
1996, the Partnership's net investment in the film, after consideration
of amortization and the write-down discussed above, was $100,000.
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JONES PROGRAMMING PARTNERS 1-A, LTD.
------------------------------------
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
----------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
FINANCIAL CONDITION
-------------------
Liquidity and Capital Resources
- -------------------------------
The Partnership's principal sources of liquidity are cash on hand and amounts
received from the domestic and international distribution of the Partnership's
programming. The Partnership had $388,762 in cash as of September 30, 1996. It
is not anticipated that the Partnership will invest in any additional
programming projects, but instead will focus on the distribution of its existing
programming. The Partnership had outstanding amounts receivable from
unaffiliated distributors totaling approximately $239,000 as of September 30,
1996. The foreign income receivable of approximately $146,000 of this amount
will be paid to the Partnership over the next three to twenty-four months as
collected by the distributors. The domestic income receivable of approximately
$93,000 will be paid to the Partnership over the next twelve months.
For the nine months ended September 30, 1996, the Partnership declared
distributions to partners totaling $482,691, of which $160,897 was paid in May
1996 and $160,897 was paid in August 1996, with the remaining $160,897 to be
paid in November 1996. These distributions are made using cash on hand,
interest income and cash provided by operating activities. Quarterly
distributions are expected to continue through the fourth quarter of 1996 at the
same level as those made during the first three quarters of 1996. Thereafter,
distributions will be suspended or substantially reduced. The Partnership will
retain a certain level of working capital, including any necessary reserves, to
fund its operating activities. Any amounts in excess of the Partnership's
working capital needs received from continued second cycle distribution of the
Partnership's programming will be periodically distributed to partners.
The General Partner, on behalf of the Partnership, will continue to manage and
arrange for the second cycle distribution of the Partnership's programming in
remaining unexploited territories and markets. In addition, the General
Partner, on behalf of the Partnership, has engaged an independent public
accounting firm for purposes of performing distribution audits of the major
distributors of the Partnership's programming. The purpose of these audits is
to identify and facilitate payment of any excess film revenue proceeds retained
by the distributors that belong to the Partnership. Based on preliminary
results of these audits, it is not anticipated that revenue proceeds indentified
and collected by the Partnership in conjunction with these audits will be
material. There can also be no assurance that the continued second cycle
distribution of the Partnership's programming will generate significant revenue
for the Partnership.
It is anticipated that proceeds from the sale of the Partnership's interests in
its programming will be distributed to partners in the future if and when the
Partnership's interests in the programming are sold. The General Partner cannot
predict at this time when, which or at what price the Partnership's interests in
its programming projects ultimately will be sold.
The General Partner believes that the Partnership has, and will continue to
have, sufficient liquidity to fund its operations and to meet its obligations.
Cash flow from operating activities will be generated primarily from the
Partnership's programming projects as follows:
"The Little Kidnappers"
---------------------
During 1990, the Partnership invested approximately $2,794,000 in a film
entitled "The Little Kidnappers." The Partnership advanced funds as production
advances to Maple Leaf to complete the film. In return for such production
advances, the Partnership received all distribution rights in perpetuity in all
markets except Canada. The General Partner, on behalf of the Partnership,
licensed the film to The Disney Channel and Maple Leaf licensed the film to the
Canadian Broadcasting Corporation. Aggregate license fees of approximately
$1,365,000 were received from these licensees. The original Disney Channel
license expired in September 1993. The General Partner has relicensed the film
to The Disney Channel for an additional license period of five years beginning
January 1, 1994 for an additional fee of $300,000 which had been received by the
Partnership as of September 30, 1996. The Canadian Broadcasting Corporation
license expired in the second quarter of 1994 and was not renewed.
In April 1991, the General Partner, on behalf of the Partnership, entered into a
distribution agreement with an unaffiliated party granting rights to distribute
"The Little Kidnappers" in the non-theatrical domestic markets for a period not
to exceed seven years. Non-theatrical markets include 16mm sales and rentals,
in-flight, oil rigs, ships at sea, military installations, libraries,
restaurants,
9
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hotels, motels or other institutional or commercial enterprises. As of September
30, 1996, gross sales made under this arrangement totaled $94,190, of which
$23,548 was retained by the distributor for its fees and the remaining $70,642
was remitted to the Partnership.
In July 1991, the General Partner, on behalf of the Partnership, entered into an
agreement with an unaffiliated party granting the rights to distribute "The
Little Kidnappers" in the domestic home video market for a period not to exceed
five years. Under this agreement, the Partnership received a minimum guarantee
of $500,000, of which $100,000 was received upon delivery of the film in October
1991. The Partnership discounted the remaining $400,000 at an imputed interest
rate of 8%, which created a discount of $79,157. The Partnership received
$50,000 in October 1992, $75,000 in October 1993, $75,000 in October 1994 and
the remaining $200,000 in October 1995. The Partnership does not expect to
receive any additional proceeds under this agreement.
In the third quarter of 1990, the General Partner, on behalf of the Partnership,
entered into a distribution agreement with an unaffiliated party, granting the
rights to distribute "The Little Kidnappers" in international television and
international home video markets for a period of five years. This agreement
expired in October 1995. The international distribution rights for the film are
now being handled by the General Partner on behalf of the Partnership. The
General Partner will earn a distribution fee equal to 25 percent of gross
international sales and will recover its actual distribution and marketing costs
incurred, with remaining net revenues to be paid to the Partnership. As of
September 30, 1996, international gross sales made under the original
distribution agreement totaled $1,139,570, of which $359,165 was retained by the
distributor for its fees and marketing costs and $771,229 was remitted to the
Partnership as of September 30, 1996. The remaining $9,176 will be paid to the
Partnership over the next three to twenty-four months as collected by the
distributor. The Partnership anticipates that it will recover its remaining net
investment in this film of $91,649 from net revenues to be generated in
remaining worldwide television and home video markets by direct distribution
efforts to be made on behalf of the Partnership by the General Partner and other
non-affiliated distributors.
"The Story Lady"
--------------
In 1991, the General Partner, on behalf of the Partnership, entered into an
agreement with NBC Productions, Inc. ("NBC") for the production of a full-length
made-for-television film entitled "The Story Lady." The total cost of the film
was approximately $4,300,000, and the Partnership invested its share of
approximately $1,183,000 in return for all distribution rights to this film
after the contractual airings on the NBC television network, which have been
completed.
In 1992, the General Partner, on behalf of the Partnership, entered into a
distribution agreement with an unaffiliated party, granting rights to distribute
"The Story Lady" in the non-theatrical domestic markets. As of September 30,
1996, gross sales made under this arrangement totaled $300,969, of which $75,241
was retained by the distributor for its fees. The remaining $225,728 has been
received by the Partnership. The General Partner, on behalf of the Partnership,
entered into an agreement with The Disney Channel, granting The Disney Channel
exclusive domestic television rights to the film for one year, from September
1994 until September 1995, for a license fee of $40,000. Of this license fee,
$26,667 was received in July 1994, with the remaining balance of $13,333
received in April 1995. In addition, the film was distributed in the domestic
home video market by the General Partner and a third party consultant beginning
in the second quarter of 1994. As of September 30, 1996, net sale proceeds
under this arrangement totaled $99,312, which were applied towards the General
Partner's recoupment of its total distribution costs. As the General Partner
has fully recovered its remaining distribution costs, any additional sales, net
of fees, will flow to the Partnership.
On behalf of the Partnership, the General Partner has sub-licensed under the NBC
agreement international television and home video distribution rights to a
distribution affiliate of NBC for approximately eight years. As of September
30, 1996, international gross sales totaled $1,419,298, of which $375,108 was
retained by the distributor for its fees and marketing costs, with the remaining
$1,044,190 due to the Partnership. As of September 30, 1996, the Partnership
had received $907,707 of such amounts. The remaining $136,483 will be paid to
the Partnership over the next three to twenty-four months as collected by the
distributor.
In October 1995, the General Partner, on behalf of the Partnership, entered into
a license agreement with an unaffiliated party, granting right to distribute
"The Story Lady" in the domestic home video market through direct, non-retail
sales for a license fee of $200,000. Under the original terms of the three year
agreement, the Partnership was entitled to $50,000 upon execution of the
agreement, and $10,000 per month for fifteen consecutive months. Of this
license fee, $50,000 was received by the General Partner in November 1995, of
which $21,341 was retained by the General Partner to be applied towards
recoupment of its remaining distribution costs incurred on behalf of the
Partnership for "The Story Lady." The remaining $28,659 was remitted to the
Partnership. As of September 30, 1996, the Partnership had received monthly
license fee payments totaling $56,923. In accordance with new payment terms
renegotiated with the distributor, the remaining balance due under the licensing
agreement of $93,077 will be paid to the Partnership over the next eight to
twelve months. During 1995, the Partnership recovered its remaining net
investment in this film.
10
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"Curacao"
-------
In October 1992, the General Partner, on behalf of the Partnership, entered into
an agreement with Showtime Networks, Inc. ("Showtime") for the production of a
full-length made-for-television film entitled "Curacao." The total cost of the
film was approximately $4,410,000. In addition to the costs of production, the
Partnership paid the General Partner $500,000 as a production and overhead fee
for services rendered in connection with arranging the Showtime pre-sale and
supervising production of this picture.
The Partnership has received license fees and a home video advance totaling
$2,650,000 from Showtime in return for granting Showtime a pay television
license through 1997 and the right to market domestic home video rights for
seven years. Home video revenues in excess of $875,000 will be shared 50/50
between the Partnership and Showtime until Showtime has received $1,875,000
after which the Partnership will receive all of the home video revenues. It is
unlikely that the Partnership will receive any additional revenues beyond the
original Showtime advance from the domestic home video distribution of
"Curacao."
In May 1993, the General Partner, on behalf of the Partnership, entered into a
distribution agreement with an unaffiliated party, granting rights to distribute
"Curacao" in the non-theatrical domestic markets. As of September 30, 1996,
gross sales made under this arrangement totaled $117,358, of which $29,340 was
retained by the distributor for its fees and $88,018 was received by the
Partnership.
The Partnership has contracted with an unaffiliated international sales agent to
market theatrical, home video, and television rights outside the United States
and Canada for a period of five years. The General Partner approved an
agreement negotiated by the international sales agent with an unaffiliated party
to market international theatrical and home video rights for a period of ten
years. The terms of such agreement provide for an advance payment of $950,000
against international theatrical and home video revenues. The payment has been
received by the Partnership net of distribution fees and expenses retained by
the distributor. No international theatrical or home video overages are
expected to be received for the remaining term of the agreement. International
television sales continue and are remitted to the Partnership, net of
distribution fees and expenses, as collected by the distributor. As of September
30, 1996, the Partnership had recorded international gross revenues of
$1,225,134, of which $352,408 was retained by the distributor for its fees and
marketing costs, with the remaining $872,726 remitted to the Partnership.
During the third quarter of 1995, the General Partner reassessed the anticipated
total gross revenue remaining from the distribution of "Curacao" in available
international and domestic television markets. Based on revised television
sales projections by unexploited territory, a reduction was made to the
Partnership's estimate of total gross revenue to be recognized from the future
distribution of the film. Accordingly, based on the reduced revenue projections
for the film (primarily in international television revenues), a determination
was made by the General Partner that the Partnership's net investment in
"Curacao" of $1,076,664 exceeded the film's estimated net realizable value of
$832,500 as of September 30, 1995. As a result, a loss from write-down of film
production cost of $244,164 was incurred to write-down the unamortized cost of
the film to its estimated net realizable value as of September 30, 1995.
Likewise, in the third quarter of 1996, the General Partner again reassessed the
anticipated gross revenue remaining from the distribution of "Curacao" based on
revised estimated television sales projections and actual results of the film's
distribution in comparison to the film's prior projections. A determination was
made by the General Partner that the Partnership's net investment in "Curacao"
of $756,744 exceeded the film's estimated net realizable value of $100,000 as of
September 30, 1996, resulting in a write-down of $656,744. The film's estimated
net realizable value was calculated based on an estimate of anticipated revenues
remaining over the life of the film from international and domestic television
distribution, net of estimated distribution fees and costs, as of September 30,
1996. These revenue projections were estimated by the General Partner and the
film's distributor based on the film's prior distribution history, the remaining
international and domestic territories available to the film for future
television distribution, and the General Partner's and the distributor's
previous distribution experience with other films. As of September 30, 1996,
the Partnership's net investment in the film, after consideration of
amortization and the write-down discussed above, was $100,000. The Partnership
plans to recover its remaining net investment in this film of $100,000 from the
net revenues generated from remaining international and domestic television
markets.
RESULTS OF OPERATIONS
---------------------
Revenues of the Partnership decreased $51,598, from $89,787 to $38,189 for the
three months ended September 30, 1995 and 1996, respectively. Revenues of the
Partnership decreased $76,579, from $262,169 to $185,590 for the nine months
ended September 30, 1995 and 1996, respectively. These decreases are due
primarily to a decrease in domestic and
11
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international sales of "The Story Lady" and "Curacao," which were $92,711 and
$159,447, respectively, for the nine months ended September 30, 1995 as compared
to $71,950 and $100,859, respectively, for the nine months ended September 30,
1996.
Filmed entertainment costs decreased $79,560, from $87,913 to $8,353 for the
three months ended September 30, 1995 and 1996, respectively. Film
entertainment costs decreased $129,480, from $215,751 to $86,271 for the nine
months ended September 30, 1995 and 1996, respectively. These decreases were
mainly the result of the overall decreases in revenues as discussed above. In
addition, the decreases were due to the Partnership's net investment in "The
Story Lady" becoming fully amortized in late 1995, which resulted in no filmed
entertainment costs being recognized in the current year. Filmed entertainment
costs are amortized over the life of the film in the ratio that current gross
revenues bear to anticipated total gross revenues.
Distribution fees and expenses decreased $8,064, from $18,465 to $10,401 for the
three months ended September 30, 1995 and 1996, respectively. This decrease was
due primarily to the overall decrease in revenues discussed above. Distribution
fees and expenses increased $802, from $51,231 to $52,033 for the nine months
ended September 30, 1995 and 1996, respectively. This increase is primarily the
result of increased international sales of "The Story Lady" during 1996 as
compared to 1995 which had more distribution-related fees and expenses in
comparison to sales of the Partnership's other programming during 1995. These
distribution fees and expenses relate to the compensation due and costs incurred
by distributors in selling the Partnership's programming in the domestic and
international markets. The timing and amount of distribution fees and expenses
vary depending upon the individual market in which programming is distributed.
Loss from write-down of film production increased $412,580, from $244,164 to
$656,744 for the three and nine months ended September 30, 1995 and 1996,
respectively. This increase was the result of a write-down of the Partnership's
net investment in "Curacao" to the film's net realizable value of $100,000 as of
September 30, 1996 which exceeded the write-down of the film recognized for the
similar period in 1995.
Operating, general and administrative expenses increased $4,765, from $6,001 to
$10,766 for the three months ended September 30, 1995 and 1996, respectively.
Operating, general and administrative expenses increased $10,406, from $25,644
to $36,050 for the nine months ended September 30, 1995 and 1996, respectively.
These increases are due primarily to an increase in royalties paid to the writer
of "The Little Kidnappers" as well as increases in audit fees resulting from
distribution audits performed on behalf of the Partnership's films and increased
direct costs allocable to the operations of the Partnership that were charged to
the Partnership by the General Partner in 1996 as compared to 1995.
Interest income decreased $1,338, from $6,374 to $5,036 for the three months
ended September 30, 1995 and 1996, respectively. Interest income decreased
$5,632, from $21,374 to $15,742 for the nine months ended September 30, 1995 and
1996, respectively. These decreases in interest income were the result of lower
average levels of invested cash balances existing during the first nine months
of 1996 as compared to the similar period in 1995.
12
<PAGE>
Part II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits
27) Financial Data Schedule
b) Reports on Form 8-K
None
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JONES PROGRAMMING PARTNERS 1-A, LTD.
BY: JONES ENTERTAINMENT GROUP, LTD.
General Partner
By: /s/ Jay B. Lewis
------------------------------------------
Jay B. Lewis
Principal Financial and Accounting Officer
Dated: November 13, 1996
14
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<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 388,762
<SECURITIES> 0
<RECEIVABLES> 238,736
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 822,146
<CURRENT-LIABILITIES> 169,179
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 652,967
<TOTAL-LIABILITY-AND-EQUITY> 822,146
<SALES> 0
<TOTAL-REVENUES> 185,590
<CGS> 0
<TOTAL-COSTS> 831,098
<OTHER-EXPENSES> (14,524)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (630,984)
<INCOME-TAX> 0
<INCOME-CONTINUING> (630,984)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (630,984)
<EPS-PRIMARY> (49.02)
<EPS-DILUTED> (49.02)
</TABLE>
